REUTERS - U.S. West Texas Intermediate (WTI) crude futures CLc1 were at $66.34 a barrel at 0144 GMT, up 20 cents, or 0.3 percent, from their last settlement. Brent crude futures LCOc1 were at $70.49 per barrel, 3 cents below their last settlement.

AUSTRALIAN LNG: $111 BLN

TWA - The Gorgon and Wheatstone LNG projects are now enjoying cash margins of more than $US30 a barrel at a $US50 price, Chevron says, and production from the $111 billion mega-projects is expected to increase this year.

New Chevron chief executive Mike Wirth told Wall Street analysts on Friday night that the US major's two Australian LNG projects were "becoming strong cash generators with cash margins of more than $US30 per barrel at a $US50 Brent price."

Last month, Gorgon produced an average of 459,000 barrels of oil equivalent a day and Wheatstone achieved 86,000 boe a day.

Brent crude is currently fetching about $US68 a barrel. The margin achieved at $US50 indicates the two LNG projects could be producing more than $US26 million ($32.8 million) of cash a day if the price received for the LNG under long-term contracts and on the spot market moved up in line with the oil price.

Mr Wirth said Gorgon's three trains and the first Wheatstone train were running well.

He said LNG in Australia, where Chevron also owns 16.7 per cent of the North West Shelf project, and unconventional production in North America would be the two principal sources of production growth for the company this year.

Gorgon has had numerous shutdowns since the $US54 billion project first shipped LNG in March 2016.

Mr Wirth said planned shutdowns on Gorgon's trains one and three had been completed last quarter to improve reliability and production. It is understood that one issue the shutdowns addressed was overheating of the trains because of poor air circulation.

Production from Gorgon's three trains was 24 per cent higher than the average over the last quarter of 2017.

Mr Wirth said Gorgon, where the third and final train first produced LNG in late March, shipped 170 LNG cargoes in 2017.

Gorgon has a design capacity of 15.6 million tonnes a year of LNG. If the average size of the 170 cargoes is similar to Chevron's fleet, about 155,000 cubic meters, Gorgon produced about 12 million tonnes of LNG last year.

There is further production upside due from the $US34 billion Wheatstone project with the second train with a 4.45 million tonnes a year capacity on schedule to start in the second quarter. The 200 terajoules-a-day domestic gas plant is expected to start in the third quarter.

Among China's LNG suppliers Australia has fared best, with imports rising 42.7 percent in the first five months to 5.39 million tonnes, almost double that of second-placed Qatar at 2.84 million tonnes.

Australia is set to apply LNG export controls, aimed at securing domestic supply of gas and keeping prices of the fuel in check, from January 1, the government announced earlier this week despite industry warnings about the decision's potential impact on energy investment.

“The rampant cost inflation on Australian projects combined with the collapse in oil prices is damaging for a lot of these projects,” said Neil Beveridge, analyst at Bernstein. LNG prices have been affected by a supply glut and are also linked to oil prices in Asia.

Gross Australian LNG production increased by 53.2% in the March quarter to 10.1 MMt with the ramp-up of production from Australia Pacific LNG (APLNG) and Golar LNG (GLNG) projects in Queensland and the first cargo from the Gorgon project in Western Australia. The country's LNG exports reached 3.8 MMt during the same period, while Russia's LNG exports totaled 2.5 MMt.

“The decline in prices is unlikely to lead to a significant reduction in production from existing producers because the high fixed costs of building the infrastructure have been paid and marginal production costs are relatively low,” said Ms Heath.

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